SF2337

Purpose of the Bill

The bill aims to update the regulations surrounding tax increment financing in Minnesota. Specifically, it seeks to expand and clarify how unobligated tax increment financing funds can be used, and it extends the expiration date for using these funds.

Main Provisions

• Use of Unobligated Funds: The bill allows authorities to transfer unobligated tax increment financing (TIF) funds for specific purposes. These include:

  1. Funding improvements, loans, interest rate subsidies, or assistance to private developments for construction or rehabilitation that creates or retains jobs, including construction jobs, that begin before December 31, 2025.
  2. Making equity investments necessary to ensure the financial feasibility of such projects.

• Spending Plan Requirement: Authorities must draft a detailed spending plan for how the transferred funds will be used, including the use of any interest earned on these funds. This plan must be approved by the municipality after a public hearing, with notice given in a newspaper and on the municipality’s website at least ten days before the hearing.

• Interest on Funds: Interest earned on transferred funds can be used the same way as the funds themselves, and municipalities can amend spending plans to extend deadlines and authorize the use of this interest, following a public hearing.

• Oversight and Compliance: Any authority transferring funds must submit a signed and approved spending plan to the Office of the State Auditor. Improperly retained, received, spent, or transferred funds are not eligible for transfer.

Significant Changes

• Extension of Expiration Date: The bill extends the deadline for utilizing transferred funds from December 31, 2025, to December 31, 2027. Funds not committed by the new deadline must be returned to the district, or if the district has been decertified, they will be distributed as excess increment.

Relevant Terms

tax increment financing, unobligated increment, construction jobs, financial feasibility, municipality, public hearing, spending plan, interest earned, Office of the State Auditor